- The Disruption Generation - Millennial Entrepreneurs Struggle to Go Public
- May 18, 2017 | Author: Michael W. Stocker
- Law Firm: Labaton Sucharow LLP - New York Office
- Michael W. Stocker represents institutional investors and consumers as one of Labaton Sucharow LLP’s principal litigators. He prosecutes securities, data privacy, antitrust and consumer class actions, and provides strategic direction to the Firm’s Case Development Team. Stocker also serves as General Counsel to the Firm. With the rise of cyber security risks in U.S. markets, Stocker has leveraged his experience to advise boards and shareholders regarding legal implications of data breaches.
Christopher P. Skroupa: What challenges do millennial executives face when it comes to transitioning from a private to public listing status?
Mike Stocker: Many of the qualities that make millennials great disruptors and innovators-outside-of-the-box thinking, a willingness to disregard the current rules of play-can make for a bumpy transition into life as an executive of a public company. Once you’re traded, you have to earn the trust of a whole new constituency, including shareholders and regulators, who need to see business conducted by the books.
Skroupa: With millennial executives, does a generation gap create tension with investors?
Stocker: It can. The largest part of the investment market is composed of institutional investors which are entities with long investment horizons and demanding views of risk. The crop of thirty-somethings who have broken through with innovative products and ideas now have to contend with pleasing investors who may have very different worldviews and economic goals. These differences can create tensions on boards as well as in the markets.
Skroupa: Do you feel millennial executives are better equipped to accommodate heightened engagement standards in terms of transparency and reporting?
Stocker: They generally are not, but often through no fault of their own. The last ten years have seen few Enron-style fraud cases, and a relaxation of some regulatory requirements regarding auditing and reporting that may give a false sense of security to new C-Suite executives. This lack of experience may even extend to young auditors, who have seen few major restatements in the last few years. But make no mistake: these dangers are still present, and volatility in the markets increases the likelihood that we will see new scandals emerge.
Skroupa: Have you observed millennial executives taking a different approach to corporate governance when they do list publicly?
Stocker: I think many newly public companies are unaware of the benefits they can realize by working with the governance goals of major investor organizations such as the Council of Institutional Investors. By showing that they are prepared to meet contemporary expectations in terms of corporate governance, companies can go a long way towards giving potential investors the sense of security they need to make long-term investments.